Spatial Monopoly and Spatial Monopolistic Competition with Two-Part Pricing
AbstractThis paper develops a model of spatial price discrimination by two-part pricing when bearing freight and nonlinear pricing are impossible. The two-part tariff comprises a membership fee and a price per visit. When fixed costs per store are low, a monopolist makes membership compulsory and builds stores too close together. With higher fixed cost, the monopolist offers consumers a choice between membership and nonmembership, and builds stores too far apart. Nearby consumers become members, more distant consumers nonmembers. Competition leads to closer spacing than monopoly, and lower welfare except at high levels of fixed cost per store. Copyright 1988 by The London School of Economics and Political Science.
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Bibliographic InfoArticle provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 55 (1988)
Issue (Month): 220 (November)
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- HAMILTON , Jonathan & THISSE , Jacques-François, 1996.
"Nonlinear pricing in spatial oligopoly,"
CORE Discussion Papers
1996066, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Mark Burkey, 2011. "Spatial pricing models with lumpy transportation costs: the case for travel cost subsidization," Letters in Spatial and Resource Sciences, Springer, vol. 4(3), pages 197-206, October.
- Wang, Judith Y.T. & Lindsey, Robin & Yang, Hai, 2011.
"Nonlinear pricing on private roads with congestion and toll collection costs,"
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- Lindsey, Robin & Wang, Judith & Yang, Hai, 2010. "Nonlinear Pricing on Private Roads with Congestion and Toll Collection Costs," Working Papers 2010-3, University of Alberta, Department of Economics.
- X. Wang & Bill Yang, 2010. "The sunk-cost effect and optimal two-part pricing," Journal of Economics, Springer, vol. 101(2), pages 133-148, October.
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